Notes to the financial statements |

For the year ended 31 December 2022

9. Other financial assets

Accounting policy

Financial assets are initially recognised at fair value plus transaction costs unless they are carried at fair value through surplus/(deficit) in which case the transaction costs are recognised in the surplus/(deficit). Purchases and sales of financial assets are recognised on tradedate, the date on which Te Wānanga o Aotearoa commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and Te Wānanga o Aotearoa has transferred substantially all the risks and rewards of ownership.

Term deposits

Term deposits are initially measured at the amount invested. Where applicable, interest is subsequently accrued and added to the investment balance. A loss allowance for expected credit losses is recognised if the estimated loss allowance is not trivial.

At year end, term deposits are assessed for indicators of impairment. If they are impaired, the amount not expected to be collected is recognised in the surplus/(deficit).

Managed fund

The managed fund is a portfolio of financial assets that are actively traded with the intention of making profits. Therefore, the managed fund is measured at fair value through surplus/(deficit).

After initial recognition, the managed fund is measured at fair value, with gains and losses recognised in the surplus/ (deficit).

Financial assets are classified into the following categories for the purpose of measurement:

› fair value through surplus/(deficit);

› amortised cost;

› fair value through other comprehensive income.

The classification of a financial asset depends on the purpose for which the instrument was acquired.

Financial assets at fair value through surplus/(deficit)

Financial assets at fair value through surplus/(deficit) include financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term or is part of a portfolio that are managed together and for which there is evidence of short-term profit-taking. Derivatives are also categorised as held for trading.

Financial assets acquired principally for the purpose of selling in the short-term or part of a portfolio classified as held for trading are classified as a current asset.

After initial recognition, financial assets in this category are measured at their fair values with gains or losses on remeasurement recognised in the surplus/(deficit).

Amortised cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in surplus/(deficit) when the asset is derecognised or impaired.

Fair value through other comprehensive revenue and expense

Financial assets at fair value through other comprehensive revenue and expense are those that are designated into the category at initial recognition or are not classified in any of the other categories above. They are included in non-current assets unless management intends to dispose of, or realise, the investment within 12 months of balance date. Te Wānanga o Aotearoa includes in this category:

› investments that it intends to hold long-term but which may be realised before maturity; and

› shareholdings that it holds for strategic purposes.

After initial recognition, these investments are measured at their fair value, with gains and losses recognised in other comprehensive revenue and expense, except for impairment losses, which are recognised in the surplus/ (deficit).

On derecognition, the cumulative gain or loss previously recognised in other comprehensive revenue and expense is reclassified from equity to the surplus/(deficit).